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WTO Goods Barometer Flashes Red as COVID-19 Disrupts Global Trade

The volume of world merchandise trade is likely to fall significantly in the first six months of the year, as the COVID-19 pandemic disrupts the global economy, according to a new report.

Released Wednesday, the World Trade Organization (WTO) Goods Trade Barometer currently stands at 87.6, far below the baseline value of 100, which suggests a sharp decline in global trade extending through the second quarter. This is the lowest value on record since the indicator was launched in July 2016.

The Goods Trade Barometer provides real-time information on the trajectory of world merchandise trade. The current reading captures the initial phases of the COVID-19 outbreak and shows no sign of the trade decline bottoming out.

This measure is consistent with the WTO’s trade forecast issued on April 8 that estimated world merchandise trade would decline between 13 percent and 32 percent in 2020, depending on the duration of the pandemic and the effectiveness of policy responses, the WTO noted.

The report on the barometer said all of its component indices were well below trend. The sharp decline in the forward-looking export orders index, at 83.3, “suggests that trade weakness will persist in the short-run,” it said.

Declines in the indices for container shipping to 88.5 and air freight to 88 “reflect weak demand for traded goods, as well as supply-side constraints arising from efforts to suppress COVID-19,” the report said. Only the indices for electronic components and agricultural raw materials showed signs of stability, although they also were below trend.

“Trade had already been slowing in 2019 before the pandemic, weighed down by persistent trade tensions and weakening economic growth,” the WTO said.

The organization’s trade statistics show the volume of world merchandise trade fell 0.1 percent in 2019, marking the first annual decline since 2009 during the global financial crisis. Like its counterpart for services, the Goods Trade Barometer aims to gauge momentum and identify turning points in global trade growth. It complements trade statistics and forecasts from the WTO and other organizations.